Time

You are here

$1.4b in Debt Penalty Waiver

By the end of the previous Iranian year (ended March 20), about 22,500 billion rials ($0.6 billion) were allocated to the banking system to waive late payment penalties and they will receive a further 54 trillion rials ($1.4 billion) in the current year for the same purpose, said the Central Bank of Iran's vice governor.

"Waiving fines for non-performing loans amounting to 100 million rials ($2,800) and debtors in rural areas will be prioritized," Akbar Komijani added during the meeting of the Government-Private Sector Dialog Council in Iran Chamber of Commerce, Industries, Mines and Agriculture on Monday, Banker.ir reported.

“According to last year’s budget law, up to 450 trillion rials ($12 billion) should be allocated for recapitalization of state-owned banks, settling a portion of government arrears to state-owned banks and waiving fines for NPLs up to 1 billion rials ($28,178) from the revaluation of CBI’s foreign assets,” he explained.

Komijani noted that bad debts worth 10 trillion rials ($266 million) have been recovered only by Agriculture Bank after the new measures were employed.

“The lion’s share of the 54 trillion rials ($1.4 billion) offered will go to the Agriculture Bank and Bank Melli,” he said.

Since February 2017, when the Cabinet first approved that penalties for non-performing loans will be waived for loans up to 1 billion rials ($28,178), about 8 trillion rials ($213 million) in fines have been waived and the banking system has recovered more than 1.6 trillion rials ($426 million) in bad debt.

According to the Cabinet decision, late payment penalties for Bank Melli, Bank Saderat, Tejarat Bank, Bank Sepah, Tose’e Ta’avon Bank, Bank of Industry and Mine, Export Development Bank of Iran, Refah Bank and Agriculture Bank will be eligible to participate in the waiver scheme.

The Iranian banking sector’s ratio of non-performing loans stood at 11% by Sept. 20, down from 13.6% in Sept. 20, 2014.